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What Trump can learn from Baltimore's port

The Trump infrastrucuture plan largely shifts development and financial initiatives to states, municipalities and the private sector — public-private partnerships, or “P3s.” The experience of the Port of Baltimore over the last decade provides a look at the benefits and limitations of the P3 technique and, importantly, its long-term vulnerabilities.

During the last 10 years Baltimore moved into the list of top 10 American ports in terms of the total value of foreign waterborne cargo handled. Intermodal container traffic, the logistics key to globalization and international supply chains, is based on the seamless transfer of container traffic between maritime carrier, port and railroad. It is an increasingly important part of the city port’s continued growth.

When port management learned of the proposal to widen the Panama Canal, and therefore handle much larger container ships in the Asia/East Coast trade, it saw great potential for the Port of Baltimore. The port already had a deep channel required by the larger ships, a strategic location vis-à-vis its inland markets, and direct access to two major rail systems. However, it needed to construct berths to accommodate the new generation of much larger container ships, obtain multiple super cranes to service those ships, and provide 50-foot-berth-side dredging — very expensive undertakings for the port given that the economy was then slipping into the Great Recession.

The Port of Baltimore is made up of both private and public (state owned) facilities, which operate under the aegis of the Maryland Port Administration (MPA). The most important public port facility is the container terminal, Seagirt. Realizing the unavailability of state funding necessary to prepare Seagirt to capture the expanded Panama Canal opportunities, the MPA (the state) turned to three separate P3s to advance the port’s strategic position.

The first P3 was the very successful award-winning partnership between the MPA and the port management firm, Ports America. This P3 is embodied in a long-term lease by which Ports America provided the resources necessary for Seagirt to service the new generation of super container ships, pays rent and shares profits with MPA over the life of the lease. This P3 has produced double digit growth in container traffic since the widened Panama Canal was opened in 2016.

The second P3, CSX’s National Gateway project, is a far-reaching program raising the vertical clearances (height restrictions) along the segment of the CSX rail system handling port container traffic. The purpose of this project is to allow double stacking of containers on special rail cars thereby effectively doubling the carrying capacity of container trains. The MPA joined the federal government and CSX in funding this successful project.

The third P3, a critical key to fully achieve the benefits of the first two, was the proposed federal government, MPA, CSX partnership to increase the vertical clearances in CSX’s Howard Street Tunnel to allow the efficiencies of direct access to on-dock double stacking. This would complete the purposes of the first two P3s and eliminate a severe bottleneck in the East Coast freight rail network long targeted by the Federal Railroad Administration.

After years of work on the Howard Street Tunnel P3 proposal, CSX unexpectedly withdrew on the eve of submitting it to the government “partner” for final grant approval. CSX claimed a change in its operating plans lessened its value of the project. In other words, the overriding public interest in developing a more efficient intermodal route and removing a bottleneck was trumped by a shift in the P3’s private interest calculus. CSX is reportedly reconsidering its decision.

While intermodalism is the logistics foundation for world trade, the United States government now has relatively little proactive standing in planning national intermodal infrastructure. Despite its great maritime history, geographic advantages and pioneering development of container based intermodalism itself, America has essentially withdrawn from this maritime trade, leaving it to shifting alliances of foreign flag carriers.

America’s planning and development role on the railroad side is not much better. Since partial deregulation in 1980 the freight rail industry has shifted from an interconnected network of many carriers into essentially four semi-monopolistic giant systems that are increasingly turning to P3s to accomplish major developmental projects involving ports. The initiative whether, and how to, expand their physical facilities remains with the private sector railroads.

This leaves the nation’s ports, the pivots between the foreign flag container carriers and the private sector U.S. railroads, as a potential area for policy development. There are almost as many port organizational models as there are ports, e.g. differing public/private ownership mixes, different kinds of political oversight, and degrees of subsidies/inter-port competitive support. But they all have one thing in common: Unlike the maritime and rail carriers, their focus is local. They are driven by issues like local jobs, taxes, local and regional economic development, etc.

Using ports as an analysis base for the development of an intermodal policy would allow the federal government to establish a set of guidelines for responding to the various different and often competitive port requests for federal P3 partnership. The federal government could move beyond its reactive position of an invited partner in uncoordinated P3 intermodal/port partnerships. It would create a proactive planning opportunity to guide the nation’s different ports in building a system of coordinated intermodal routes.

Charles H. White Jr. (chwjr57@gmail.com) served as port commissioner for the Port of Baltimore from 2007-20015. He previously was head of Railroad Policy at the Federal Railroad Administration and professor of logistics and intermodal transportation at the U.S. Merchant Marine Academy. He is presently Senior Research Fellow at the Tuck Graduate School at Dartmouth.

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